I am curious about how many banks take as collateral deposit accounts at other financial institutions. Do you use a control agreement? Does the f.i. normally sign the control or is it a struggle to get one signed?

What about investment property at other brokerage houses?

We do this although I personally hate it. We don't have our own brokerage however and therefore do take collateral at a brokerage. We do require a control agreement. You should not advance until you have the signed agreement. After you advance it can be next to impossible to get your customer to care about getting their other bank/brokerage to sign the agreement.

Thanks.

I personally hate the idea, too, because the borrower wants to close the loan as soon as possible - and yet s/he doesn't understand that the other financial institution has to sign the control agreement for us to have any collateral.

I'm looking at doing a control agreement with an outside brokerage firm as well. It is already next to impossible to get anywhere with them, so I can't imagine advancing funds before getting sigs in place.

Do you also have the borrower sign a security agreement? Do you file any UCC statements? Out current procedures say "yes" to the agreement and "no" to the financing statements.

We do quite a few loans to customers using their "outside" brokerage accounts as collateral. Again, can't fund until the brokerage firm signs the Control Agreement. You will still need a Pledge/Assignment document for your security acreement, and it's good to have an Irrevocable Stock/Bond Power or Entitlement Order where your Grantor appoints your Bank as attorney with the ability to handle the account if necessary.

And direct the brokerage firm to send duplicate statements to the bank.

Be careful if the "deposit account" secures a consumer transaction. In most jurisdictions (not all but most), a lien on a deposit account in a consumer transaction is eliminated from the code. Therefore perfection may be difficult even with a control agreement. In problem states you need to understand and use the special rules in section 9.304 to your advantage. Tom Bridge, BBCON

The initial question was regarding a security interest in a deposit account and not investment property. Both can be perfected by control. However, investment property can also be perfected by a filing. This is not true for a deposit account.

Any wise depository institution would never sign a control agreement accept for a sister institution. There are more risks in doing so than you would want to entertain.

And yes, when the collateral is investment property, I tend to both take control and file a financing statement. It has to do with the 20-day rule.